Leader skill: Elf ATK and REC 2.5x
Team skill: When Saruman leads a team of four Gnomes of the same rarity (either 3★ or 4★), the Gnomes' base ATK stat is multiplied by 10.

Strengths and Weaknesses
+ Fully farmable! Not a single diamond draw needed.
+ Cheap! Highest team cost will be 46, so you could technically play this at level 1.
+ Amusing to watch
- Extremely restricted team composition
- Low HP
- Runs out of Hearts easily

Members

While you can have any combination of colours, Saruman himself is Dark, so you generally want four Dark Gnomes.
The Elf Carnival outfit for the Dark Gnome gives an additional 413 HP, 222 ATK and 270 REC, which is roughly a 50% increase in stats. None of the other Gnomes have such a costume, meaning the increased stats are unique to this attribute. So we have a pretty much fixed setup for optimum performance.

This composition has | 8,525 HP | 8,037.5 REC | 83,830 ATK |. An individual Gnome has 8,020 ATK, which is higher than Metazord, and you've got four of them! Pretty insane for a bunch of 4★ trash mobs, eh?

Allies

Ally choices are more diverse, and we'll look to these to shore up the team's low HP and poor utility.

★★★★★
HP is the most important thing to address with this team, and Komatsuhime deals with it quite effectively. With her as ally, the team tanks up to 21,738 HP. That 4x ATK multiplier doesn't hurt either. I recommend her as the go-to ally.

★★★☆☆
Operates on similar principles to Komatsuhime, Izanami also gives a HP buff. Using her brings the team to 22,934 HP. However, trading ATK for unnecessary REC and not being an Elf makes her a far poorer choice than Komatsuhime, though you might find some use in having a fast attack converter that doesn't remove hearts.

★★★☆☆
Oh, Lucy. Once the queen of the Elf meta, she's now been badly dethroned. But that doesn't mean she's not useful anymore! 20% damage reduction is effectively a 1.25x HP multiplier, which isn't a lot but still helps. More importantly though, she generates lots of hearts to maintain your Gnomes' converts with, so long as you can keep them from dissolving. Her active is pretty nice too.

★★★★☆
I mention this pair of off-color Elves because they both give an Elf ATK multiplier and damage reduction, which the team likes. Andromeda's leader skill is weaker than Cornflower's, and her active isn't doing very much when most of your damage comes from the Gnomes, so she takes a back seat. Cornflower's active can be useful in a number of situations, so you might consider him for the utility.

★★☆☆☆
A 4.5x ATK multiplier is nice, but we're already removing Hearts most of the time, and Rose doesn't give any defensive ability on her own. Her active also isn't particularly useful; there are better booster options.

★★☆☆☆
Our former goddess! Daji's combo boost is still powerful with our huge ATK, but like Rose she offers no defenses. The time tunnel active would be your primary reason for choosing her.

★☆☆☆☆
These guys all give a flat multiplier of 3.5x or 4x, which is weaker than Rose, so like Daji they're mainly to be considered for their actives. Yao Hou is especially useful in this regard.

Conclusion: ★★★★★
This team can't handle very much, but what it can handle it does with flair!